Malaysia Airlines posts operating profit in Q2 2013

by Vinay Bhaskara

Newly minted oneworld alliance member Malaysia Airlines saw progress in Q2 2013 in its corporate turnaround plan as the carrier swung to a RM (Malaysian Ringgit) 8 million (US $2.4 million) operating profit from an operating loss of RM 102 million (US $31.0 million) during the same period a year prior.

The performance was buoyed by 14% revenue growth on a 19% increase in capacity. Traffic grew 29% pushing seat load factors to a 10 year high of 80%. Q2 marked the fourth consecutive quarter of positive cash-flow from operations and Group cash balance improved to RM 5.4 billion (US $1.64 billion).

Net losses for Q2 were reduced 50% to RM 176 million ($53.5 million) as the carrier increased productivity and controlled costs; especially fuel expense, which fell 7.5% year-over-year. For the first half of 2013, operating loss was RM 157 million (US $47.7 million) and net loss was RM 455 million (US $138.3 million – down from RM 409 million [US $124.4 million] and RM 521 million [US $158.3 million] respectively).

Said Malaysia Airlines Group CEO Ahmad Jauhari Yahya:

With the encouraging performance at the revenue generation level, we can now focus on implementing more structural improvements, including enhancing our administration and support services. We will continue to improve operational effectiveness such as continued improvement in our On Time Performance, turn times on our aircraft, better engineering service turnaround, reducing service disruptions, precise material and inventory management, and much more which will further contribute to the bottom-line in the future.

Quarters three and four are traditionally the strongest for Malaysia Airlines, and the carrier has made its first Q2 operating profit in several years. The carrier still hopes to reach net profitability by the end of 2014 and claims that it is on track to meet that metric. Having taken delivery of 6 A380s, 7 A330s, and 8 Boeing 737-800s over the past 12 months, passengers carried grew to 4.2 million passengers.

Premium cabin demand received a boost on the introduction of the 494-seat Airbus A380, with premium cabin (First and Business) demand up 36% year-over-year on a 17% increase in capacity. The A380 has already been deployed to London, Paris, and Hong Kong from Malaysia Airlines’ hub at Kuala Lampur.

Malaysia Airlines is one the largest overseas carriers in India, and is slated to launch services to Kochi in September